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Citi Wealth Insights

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US CPI preview – story of supply constraints and higher prices

USD: With markets fully attentive to the US inflation outlook, Citi analysts expect another month of a strong 0.3% rise in US April core CPI with risks of a 0.4% print as prices still firm in key components like rents, likely to be more sustained. The theme of April’s US data so far has been one of increasingly binding supply constraints pushing prices higher. Another upside surprise in core CPI would be further confirmation of inflationary pressures building in the US economy.
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UK 2021 Scottish parliamentary election results – concerns around Scottish independence ease near term

GBP: As expected, pro-independence parties win a substantial majority in last week's Scottish elections but the main pro-independence party (the SNP) falls just short of an overall majority, winning 64 seats out of 129. Conservatives remain the second-largest party, while both Labor and the Liberal Democrats lose support.
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US April jobs report - weak job growth, strong wages – and a turn in the USD outlook to more negative

USD: The US economy adds just 266K jobs in April, well below the 1mln consensus (and Citi at 1.15mln) and the previous month is also revised down from 916K to 770K.
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BoE MPC board meeting review – resisting the hawkish temptation

GBP: BoE keeps all policy settings unchanged (Bank Rate at 0.1% unchanged, unanimous, corporate bond purchases unchanged at 20bn, unanimous and Gilts purchases of GBP875bn unchanged but with a 8-1 vote as Andy Haldane dissents, though this is largely inconsequential as he leaves after the next meeting).
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US Treasury Secretary Yellen clarifies comments on higher rates

USD: US Treasury Secretary Yellen moves markets mid-week by suggesting the Fed may at some point raise interest rates to head off higher inflation.
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RBA upgrades activity forecasts but still expects low inflation

AUD: RBA maintains its dovish tone in the board meeting yesterday, despite upgrading its key economic forecasts, by committing to making a decision on rolling forward its yield curve control (YCC) and asset purchases (LSAP) at the July Board meeting.
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